State audit faults Lewis Museum's financial oversight

An audit of the Reginald F. Lewis Museum of Maryland African American History & Culture released Thursday uncovered slipshod accounting practices, among them failing to fully inventory its collection and neglecting to file annual reports, in violation of state law.

The state's Office of Legislative Audits examined the period between Feb. 24, 2010, and March 11, 2013, for the Maryland African American Museum Corp., which runs the Lewis.

In a written response that accompanied the audit, museum officials indicated that they would implement all the report's recommendations and go a step further.

"The museum is working to address the concerns as outlined in the audit," state Sen. Nathaniel McFadden, who sits on the legislature's Audit Committee, said Thursday. "They are taking the findings very seriously and want to fix the problems."

An article in Sunday's editions of The Baltimore Sun revealed that the Lewis has consistently fallen short of fundraising goals, forcing the state to shore up its finances. For the past two years, taxpayers — who already contribute $2 million annually to the museum — have kicked in extra to make up the budget gaps: $430,000 this year and $450,000 last year.

That amounts to nearly $74 for every one of the 32,974 visitors in the fiscal year ending June 30.

The audit findings released Thursday document a lack of oversight of key financial procedures:

•As of March 11, the museum corporation had not filed annual reports for 2011 or 2012 to the governor or general assembly.

In response, museum officials said that the 2012 annual report was filed after the audit was completed. The 2013 annual report will be submitted before Monday, and the 2011 annual report will be completed by Dec. 31.

"The hire of an Associate Director of Development ... ends a more than a two-year long vacancy in that position and enables [the museum corporation] to continue the responsibility for preparing future annual reports appropriately," the museum's executive director, A. Skipp Sanders, wrote in the audit response.

•The Lewis' 5,200 works of art and historical objects are supposed to be inventoried at least once every three years. But, as of March 11, no inventory dates could be found for 950 of those items, or 18 percent of the collection.

"Our museum collection is managed according to industry standards," Helen Yuen, the Lewis' director of marketing, wrote in an email to The Sun. "The recommendations provide a means to maximize its security through additional internal controls."

•The museum's endowment fund does not adhere to the investment policy established by the board of directors. Between 40 percent and 60 percent of the roughly $8 million is supposed to be invested in stocks. Actually, 72 percent of the total endowment was invested in stocks.

The audit repeated a recommendation that it made in its 2010 report — that the museum's finance and audit committee "monitors and directs investments" in accordance with the board's policy.

The museum promised to comply. In addition, Yuen said, the board would create an investment committee.

McFadden said that the problems unearthed in the audit should be fixed. But "on a scale of one to 10," he said, "this is about a two. Compared to some of the audits we've seen over the years, this is run of the mill."

But state Del. Kathy Szeliga, the House minority whip, who spent two years on the budget committee overseeing the museum's finances, described the audit as "alarming."

"If people knew that the state was spending $74 for every visitor to that museum, I think they'd be upset and want answers," she said. She suggested that the Lewis consider merging with the Smithsonian National Museum of African American History and Culture, which is scheduled to open in 2015 in Washington.